Britain to Create Fund for Shale Gas Revenue

Britain to Create Fund for Shale Gas Revenue

Article excerpt

The government of Prime Minister David Cameron said it would
create a sovereign wealth fund to invest future proceeds from oil
and gas extracted from shale deposits.

The British government said over the weekend that it would
establish a sovereign wealth fund with the proceeds from extracting
natural gas from shale.

The announcement, which was made on Saturday, might be seen as
premature because no shale gas production is likely to occur in the
near future. The decision is another step by the government of Prime
Minister David Cameron to encourage development of a shale gas
industry and overcome public opposition to the extraction process
known as hydraulic fracturing, or fracking.

Edward Davey, the energy minister, said in a statement on
Saturday that the sovereign wealth fund "was part of this
government's broader strategy to strengthen our security of supply
in a cost-effective way for generations."

Oil-producing countries like Norway and Kuwait, as well as the
emirate of Abu Dhabi, have built up large sovereign wealth funds
intended to save and invest the proceeds from the extraction of
fossil fuels for future generations. Studies have shown that Britain
has shale gas potential, but whether the gas is commercially
exploitable will not be known until more exploratory wells are
drilled.

George Osborne, the chancellor of the Exchequer, suggested on
Saturday that the British sovereign wealth fund might be used for
the benefit of northern England, which is thought to have
substantial deposits of shale gas and has lagged behind southern
England in economic growth. Setting up a fund is "a way of making
sure this money is not squandered on day-to-day spending but
invested in the long-term economic health of the north to create
jobs and investment there," Mr. Osborne said, according to the BBC.

With North Sea oil and gas production in decline, the government
hopes that tapping into shale formations will attract new investment
and provide new sources of energy.

The government is in the midst of opening up large chunks of land
to oil and gas exploration. Bids for the new tracts were due on Oct. …